Based on our research several important implications exist for future research. Our first hypothesis, stated that the analysis of growth patterns yields interesting results in terms of identifying the antecedents and correlates of new venture growth. For example, previous research specifies that multiple founders are better. However, the analysis of growth patterns suggests support for that position case only when founding teams remained stable. The claim that multiple founders are better assumes that access to the resources and competencies of multiple founders is an ongoing condition and will not result in dysfunctional infighting and eventual costly buyouts. More research should focus on the formation and continued functionality of startup teams.

The finding that major new product innovations were preceded by the acquisition of new personnel also represents a significant new insight. We established the importance of acquiring employees with new technical abilities or knowledge of markets using in-depth cases, but testing such relationships requires analyses in larger data sets. We caution business founders, however, about hiring new personnel with the prospect of hitting a home run--founders oftentimes express disappointment about not getting what employees promise. Identification of key employees occurred only after their innovations proved to be valuable. It is far more difficult to identify key contributors before they have made a substantial contribution to the organization.

Likewise, most of the research with respect to new venture growth attempts to assess ongoing conditions rather than discrete events. A number of researchers have stated that opportunities may be more abundant in rapidly growing industries or where there have been substantial legislative or regulatory changes (e.g. Hambrick and Lei, 1985;Hofer, 1975; Hofer and Sandberg, 1987). However, there has been little mention of the possible risk associated with such opportunities. Regulatory changes can create overnight opportunities, likewise, such changes can also destroy such opportunities overnight. Additional research might focus on the stability of markets created by regulation, technology, or other rapidly changing events.

Our analysis of the relationship between performance at one time period and subsequent performance provides some additional insights. First, the assumption that more is better does not appear to be ill founded. The relationships between 1990 sales growth and 1994 sales growth was relatively weak, but appears to be linear. In other words, firms with low sales growth in 1990 are significantly more likely to have continued slow sales growth in 1994. Companies with rapid sales growth in 1990 are more likely to have continued rapid sales growth in 1994. Hence, our second proposition was unsupported.



Ball, R. & Brown, P. (1968). An empirical evaluation of accounting income numbers. Journal of Accounting Research, 6:159-178.

Billingsley, P., Croft, D. J., Huntsberger, D. V. & Watson, C. J. (1986). Statistical inference for management and economics. Third Edition. Boston, MA.: Allyn and Bacon.

Birch, D. (1979). The Job Generation Process. Cambridge, MA: Harvard University Press.

Birley, S. (1986). The role of new firms: Births, deaths, and job generation. Strategic Management Journal, 7:361-376.

Bruno, A., McQuarrie, E., & Torgrimson, C. (1992). The evolution of new technology ventures over 20 years: patterns of failure, merger, and survival. Journal of Business Venturing, 7: 291-302.

Brush, C. & Vanderwerf, P. (1992). A comparison of methods and sources for obtaining estimates of new venture performance. Journal of Business Venturing, 7(2): 157-170.

Buzzell, R. D., & Gale, B. T. (1987). The PIMS principles: Linking strategy to performance. New York: Free Press.

Bygrave, W. (1989). The entrepreneurship paradigm (I): a philosophical look at its research methodologies. Entrepreneurship Theory and Practice, 13: 7-26.

Chandler, G. N. & Hanks, S. H. (1993). Measuring the performance of emerging businesses: a validation study. Journal of Business Venturing. 7(3): 223-236.

Chandler, G. N. & Hanks, S. H. (1993). Market attractiveness, resource-based capabilities, venture strategies, and venture performance. Journal of Business Venturing. 9(4): 331-349.

Chrisman & Leslie (1989). Strategic, administrative and operating problems: The impact of outsiders on small firm performance. Entrepreneurship Theory and Practice. 13(3) :37-51.

Covin, J. G. & Slevin, D. P. (1990). New venture strategic posture, structure and performance: an industry life cycle analysis. Journal of Business Venturing. 5(2): 123-125.

Duchesneau, D. A. & Gartner, W. B. (1990). A profile of new venture success and failure in an emerging industry. Journal of Business Venturing. 5(5): 297-312.

Eisenhardt, K. (1989). Building theories from case study research. Academy of Management Review. 4, 532-550.

Low, M. & MacMillan, I. (1988). Entrepreneurship: past research and future challenges. Journal of Management, 14(2) 139-161.

McDougall, P., Robinson, R., & DeNisi, A. (1992). Modeling new venture performance: an analysis of new venture strategy, industry structure, and venture origin. Journal of Business Venturing, 7: 267-289.

Miller, D. The Icarus Paradox (1990). New York. Harper Business.

Powel, J. (1992). Entrepreneurs are our best bet for growth. Wall Street Journal, July 8: A9.

Reynolds, P. (1987). New firms: societal contributions versus survival potential. Journal of Business Venturing, 2: 231-246.

Robinson K. C., Kunkel S. W. & Hofer, C. W. (1994). New approaches for assessing new venture performance. Frontiers of Entrepreneurship Research, W. D. Bygrave, S. Birley, N. C. Churchill, E. Gatewood, F. Hoy, R. H. Keeley, W. E. Wetzel, Jr. Eds. Babson Park, MA: Center for Entrepreneurial Studies, Babson College.

Roure, J. & Keeley, R. (1990). Predictors of success in new technology based ventures. Journal of Business Venturing, 5: 201-220.

Sapienza, H. J. (1992). When do venture capitalists add value? Journal of Business Venturing. 7(1):9-28.

Singer, B. (1995). Contours of Development. Journal of Business Venturing, 10: 303-329.

Timmons, J. (1990). New Venture Creation. Homewood, IL: Irwin.

Yin, R. (1989). Case Study Research. Newbury Park, CA: Sage.

Previous Page | Main Menu



1997 Babson College All Rights Reserved
Last Updated 1/15/97 by Geoff Goldman & Dennis Valencia

To sign-up for the Center for Entrepreneurial Studies' publication lists,
please register with the
Entrepreneurship WebTeam.